ELGIEQUIP - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.0
| Stock Code | ELGIEQUIP | Market Cap | 15,595 Cr. | Current Price | 492 ₹ | High / Low | 608 ₹ |
| Stock P/E | 44.4 | Book Value | 57.9 ₹ | Dividend Yield | 0.45 % | ROCE | 28.4 % |
| ROE | 21.9 % | Face Value | 1.00 ₹ | DMA 50 | 461 ₹ | DMA 200 | 494 ₹ |
| Chg in FII Hold | -3.01 % | Chg in DII Hold | 1.84 % | PAT Qtr | 90.8 Cr. | PAT Prev Qtr | 81.5 Cr. |
| RSI | 65.0 | MACD | -0.78 | Volume | 5,74,997 | Avg Vol 1Wk | 9,06,613 |
| Low price | 390 ₹ | High price | 608 ₹ | PEG Ratio | 1.90 | Debt to equity | 0.01 |
| 52w Index | 46.7 % | Qtr Profit Var | -7.24 % | EPS | 11.1 ₹ | Industry PE | 38.6 |
📊 Analysis: ELGIEQUIP shows strong fundamentals for long-term investment. ROCE (28.4%) and ROE (21.9%) highlight efficient capital usage and profitability. EPS of 11.1 ₹ is healthy, and debt-to-equity at 0.01 reflects a virtually debt-free balance sheet. The P/E ratio (44.4) is slightly above the industry average (38.6), indicating premium valuation. PEG ratio of 1.90 suggests growth is priced at a higher multiple, but still acceptable given strong fundamentals. Dividend yield of 0.45% provides minor shareholder returns. Technically, the stock is near DMA 50 (461 ₹) and DMA 200 (494 ₹), with RSI at 65 (approaching overbought) and MACD slightly negative, indicating consolidation before potential upside.
💰 Ideal Entry Zone: 460 ₹ – 480 ₹ (near DMA support, offering margin of safety).
📈 Exit / Holding Strategy: For long-term investors, holding is recommended given strong ROE, ROCE, and low debt. If already holding, maintain positions with a 3–5 year horizon. Exit strategy: consider partial profit booking near 600–610 ₹ (52-week high zone) if valuations stretch, but retain core holdings for compounding growth.
Positive
- Strong ROCE (28.4%) and ROE (21.9%) indicate efficient capital deployment.
- Debt-to-equity ratio of 0.01 shows virtually debt-free operations.
- EPS of 11.1 ₹ reflects consistent profitability.
- DII holdings increased (+1.84%), showing domestic institutional support.
Limitation
- P/E ratio (44.4) is slightly above industry average (38.6), indicating premium valuation.
- PEG ratio of 1.90 suggests growth is priced at a higher multiple.
- RSI at 65 indicates near overbought levels.
- Volume lower than 1-week average, suggesting reduced trading interest.
Company Negative News
- Quarterly profit variation -7.24%, reflecting short-term earnings slowdown.
- Decline in FII holdings (-3.01%), showing reduced foreign investor confidence.
Company Positive News
- Quarterly PAT improved sequentially (90.8 Cr. vs 81.5 Cr.).
- Strong institutional support from DIIs (+1.84%).
Industry
- Industry PE at 38.6, slightly lower than company’s valuation, suggesting ELGIEQUIP trades at a premium.
- Capital goods sector benefits from infrastructure growth and industrial expansion.
Conclusion
✅ ELGIEQUIP is a good candidate for long-term investment, supported by strong ROE, ROCE, low debt, and consistent profitability. Ideal entry zone is 460–480 ₹ for margin of safety. Investors should hold for 3–5 years to benefit from compounding growth, with partial exits near 600–610 ₹ if valuations peak.
Selva, would you like me to extend this into a peer benchmarking overlay with capital goods sector peers (like Elecon, Thermax, ABB India) so you can compare relative strength and margin-of-safety positioning for your basket rotation strategy?